A Storrs-based start-up had its grants frozen after an audit determined funds had been wrongly used. Three of the five members of the settlement are university professors, while all five have ties to the university. (File Photo/Daily Campus)

A $400,000 settlement was agreed upon for the misuse of federal grants by five members of a Connecticut-based company, three of whom are also faculty of the University of Connecticut’s School of Engineering.

Aquatic Sensor Network Technology, LLC, (AquaSeNT), a Storrs-based underwater wireless communications company, was investigated by auditors and found to have not been truthful about that ways in which they were spending grant money funded by the National Science Foundation, according to a U.S. Attorney press release.

None of the professors involved admitted to any wrongdoing and, according to the CT Mirror, explicitly denied any wrongdoing in the settlement, signed by all five members of the company on May 20.

"The AquaSeNET parties expressly deny each and every of the government's allegations set forth herein, and they expressly deny they engaged in any wrongful conduct whatsoever. This settlement agreement is made in compromise of disputed claims and is neither an admission of wrongdoing or liability by the AquaSeNET parties, nor a concession by the United States that its contentions and claims are not well founded," the settlement reads.

AquaSeNT has received over $1 million in NSF grants since 2008, according to the U.S. Attorney press release.

Auditors from the NSF investigated AquaSeNT employees Dr. Jun-Hong Cui, Dr. Yong Ma, Dr. Shengli Zhou, Dr. Zhijie Shi, and Juanjuan Liao. Three of them (Cui, Zhou and Shi) are also members of the UConn faculty.

During the investigation, the NSF froze not only the grants given to AquaSeNT, but also grants awarded separately to these individuals for research being done at UConn, said Jeff Seemann, Vice President for Research at UConn.

Andrew Zehner, Associate Vice President of Technology Commercialization and Industry Relations at UConn, said that it was a normal process for the NSF to also freeze the grant money to UConn for just these professors since they were under investigation for their own company.

Seeman stated that during their research at UConn, the professors filled out a sole source disclosure stating that the only people that had the right equipment they needed for their research at UConn was AquaSeNT.

“They didn’t tell us that they owned it (AquaSeNT),” Seemann said. “They also signed a form saying they had no knowledge or interest in the company they were buying the equipment from, which was false.”

Seven grants to the UConn professors were initially suspended, Seemann said. Two of those came up against their end date and expired while they were suspended. The remaining five were terminated.

The value of money that was returned to the NSF was approximately $2 million, Seeman said.

“This is a very rare event. It’s unfortunate but I can’t see it having any impact on the research success at UConn,” Seemann said. “We have tightened up policies and procedures around research activities to make it much more difficult for someone to spend grant money here on a company outside.”

Emma Krueger is a staff writer for The Daily Campus. She can be reached via email at emma.kruger@uconn.edu.